Installment Loan Regulations & Laws - Wisconsin
- Wisconsin Department of Financial Institutions
- 201 W Washington Avenue, Suite 500
- Madison, WI 53703
- Phone: 608.261.9555
- Fax: 608.261.7200
- Money & Rates of Interest
Installment loans are usually used by people who wouldn't be approved for any other loans or credit. They're used to cover costs in the short-term, and if you have bills to pay and need a little help, they might be a good source of financing for you. But with the benefits of these personal loans, there are things that borrowers need to know regarding how they work and why they may want to look to other forms of financial assistance if they don't find these loans agreeable. The main thing to know is that the Federal government largely takes a hands off approach to installment loans leaving them up to the states to create the laws and regulations, and Wisconsin in particular has their own laws regarding installment loans.
Differentiating Between Payday Loans And Installment Loans In Wisconsin
Payday loans and installment loans have often been intertwined with each other when discussed, and while they do serve a similar purpose, they have come to be defined in different terms and subjected to different terms according to the Wisconsin State Legislature. One of the criticisms that has come with Wisconsin installment loans is that they have been used as a way to escape reporting regulations that have come with payday loans as stated by this story. Payday loans in Wisconsin have now come to be defined as short-term loans that last for 90 days or less since a 2011 law was passed, and most other loans that last for longer terms are Wisconsin installment loans, though on occasion this may include auto title loans. While regular payday loans are required to offer four installment payments if the borrower cannot repay them in full at the end of their maturity date, installment loans are usually structured to be paid off in installments right from the beginning and usually have payment plans listed by the lenders.
Installment Loan Lender Registration Requirements
Installment loans Wisconsin do have licensing requirements that the lender does have to follow as specified in Section 138 in the lists of state codes regarding loans and financing. It's the Wisconsin State Department of Financial Institutions (DFI) who's responsible for licensing and ensuring that lenders are complying with all state laws regarding lending practices. If customers believe they've been the victim of a payday or installment loan that has not followed state legislation, they can file a complaint with the DFI, and if their complaint has been found to be valid, the lender will usually have to stop collecting payments and may even have to refund interest payments collected from customers.
Installment Loan Interest Rates In Wisconsin
There are some states that look to put caps on payday and installment loans either by limiting how much the annual interest rate can be on them, or by limiting who can use them based on borrower eligibility requirements. Wisconsin has really not put regulations on either of those requirements, although there is one area of Chapter 138 Section 9 that does bring up installment loans that are for $3,000 or less, and have a maturity date of 36 months and 15 days from the time they're issued. The code in that section says the lender isn't supposed to charge more than $9.50 per $100 for the first $1,000 borrowed, and then $8 per $100 for the remaining principal. But it's a little unclear which specific installment loans this covers as many lenders offer an installment loan online with very high interest rates greater than 300 percent. The lender is required to be upfront about the kind of interest and fees they are charging, and they're also required to have a disclaimer posted on their website or in their store that warns the customer that the personal loan is only intended for short-term purposes, and it doesn't offer any road to long-term financial stability.
Other Laws The Borrower Should Know
As with all other states, Wisconsin does have a couple laws that the borrower must follow to use an installment loan. First off, they must be able to prove they are 18 or older. And second, they must prove they are a US citizen or legal permanent resident. While Wisconsin doesn't really have proof of income or banking requirements in their laws to use an online loan, the lender will usually ask for them so that they have the assurance that the borrower will be making payments.
Applying For An Online Installment Loan In Wisconsin
If you need the cash immediately and find that your income or credit score denies you the opportunity to get a loan from the bank, getting an online installment loan may be the way to go. You can usually get a fair installment loan estimate based on the income information and other factors detailing your ability to repay the loan. Applying online is usually a very short process, but you'll want to have information handy including the following:
- A government-issued photo ID
- Your bank account details showing a checking account in good standing
- Employment or other income information
The initial estimate is usually completed where you'll see how much you could borrow, and then a representative contacts you to complete the paperwork. You can use the installment loan funds for any purpose you need, but just make sure you've checked the lender's license and know of an attorney to contact in case you have questions about the legality of the personal loan. And do not sign any agreement unless you fully understand it.